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100

Information Notice No. 93­100: Reporting Requirements for

Bankruptcy

UNITED STATES

NUCLEAR REGULATORY COMMISSION

OFFICE OF NUCLEAR MATERIAL SAFETY AND SAFEGUARDS

WASHINGTON, D.C. 20555

December 22, 1993

NRC INFORMATION NOTICE 93‐100: REPORTING REQUIREMENTS FOR BANKRUPTCY

Addressees

All U.S. Nuclear Regulatory Commission licensees.

Purpose

NRC is issuing this information notice to alert addressees to the failure of

some licensees to notify NRC when they filed for bankruptcy. It is expected

that recipients will review the information for applicability to their

facilities and consider actions, as appropriate, to avoid similar problems.

However, suggestions contained in this information notice are not new NRC

requirements; therefore, no specific action nor written response is required.

Description of Circumstances

On August 6, 1993, management at an NRC‐licensed hospital announced that it

had filed for bankruptcy and would be discontinuing operations at the close of

business that day. The announcement came to the attention of NRC regional

staff who contacted the hospital. Two NRC inspectors traveled to the facility

to observe the disposition of licensed material. All radioactive material was

transferred to another NRC‐licensed hospital, except for radioactive waste

stored at the hospital for decay. A former supervisor agreed to return to the

hospital at the appropriate time to properly dispose of the waste. NRC staff

coordinated with the court‐appointed trustee before the hospital's license was

terminated.

Regulations in 10 CFR 30.34(h), 40.41(f), 50.54(cc), 70.32(a)(9), and

72.44(b)(6) require each licensee to notify the appropriate NRC Regional

Administrator, in writing, immediately following the filing of a voluntary or

involuntary petition for bankruptcy under any chapter of Title 11 (Bankruptcy)

of the United States Code. In the incident described above, the radioactive

material was controlled, but there have been cases where unlicensed trustees

and creditors have taken possession of items without knowing that they

contained radioactive material or being aware of the safety and regulatory

requirements associated with the material. These parties typically requested

assistance after they discovered that they possessed radioactive material. To

date, no serious injuries have resulted from these incidents. Licensees who

failed to notify NRC claimed that they were unaware of the requirement or

overlooked the requirement because of other demands created by the bankruptcy.
9312160093.

IN 93‐100

December 22, 1993

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Discussion:

The purpose of the bankruptcy notification requirement is to allow NRC to

verify the safe disposition of radioactive material possessed by the bankrupt

licensee. Trustees or creditors taking possession of radioactive material can

create a substantial safety hazard if the material is handled without the

proper safety precautions, or transferred to unauthorized recipients. NRC

regulations require each licensee to notify NRC of a petition for bankruptcy

filed by or against (1) the licensee, (2) an entity controlling the licensee

or listing the licensee/license as property of an estate, or (3) an affiliate

of the licensee. The terms "affiliate" and "entity" are defined in 11 U.S.C.

101(2) and 101(14), respectively. The notification must indicate the

bankruptcy court in which the petition is filed, and the date of the filing.

In addition to the potential safety hazards, failure to notify NRC and

maintain control of licensed material could lead to enforcement actions at a

time when a licensee is already experiencing financial difficulty. Licensees

may wish to share this information notice with financial or legal staff in

their organization.

This information notice requires no specific action nor written response. If

you have any questions about the information in this notice, please contact

the technical contact listed below, or the appropriate regional office.

/s/'d by Carl J. Paperiello

Carl J. Paperiello, Director

Division of Industrial and

Medical Nuclear Safety

Office of Nuclear Material Safety

and Safeguards

Technical contact: Kevin M. Ramsey, NMSS

(301) 504‐2534

Attachments:

1. List of Recently Issued NMSS Information Notices

2. List of Recently Issued NRC Information Notices

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